Tesla has announced that it will temporarily halt the majority of car production at its factory in Berlin for two weeks due to disruptions in Red Sea shipping routes, starting from the 29th of January.

The announcement is an indicator that the attacks from Iran-backed Houthi, combined with the US and Britain strikes on Yemen in reprisal for Houthi attacks can have a major impact on global trade.

According to the Guardian, disruptions in the crucial shipping route to the Mediterranean have forced companies to use an alternative but significantly longer route around the southern tip of Africa, which resulted in a 1.3% decrease in global trade in December.

The announcement, coupled with a price reduction of four different models in China, drove Tesla’s shares to experience a 3% decline on Friday.

Responding to Tesla Berlin’s statement, Paul Barker Managing Editor at Carwow said: “While this development is not completely surprising, it is certainly unwelcome news for Tesla. However, manufacturers do typically have a better handle on supply chain crisis management in the wake of the chip-related disruption that followed on from Covid and at this stage, we don’t believe new car buyers shouldn’t panic about any return to longer delivery times for orders.

“But if there is any future escalation of problems moving cars, or car parts, across the world, it would likely lead to an increase in demand, and increase in value, of good-condition second-hand cars. Used car prices have been falling recently from historic highs, so I’m sure Europe’s whole automotive industry will be keeping a close eye on the on-going geo-political developments in the Red Sea.”

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